The deadline for obtaining an order to suspend discharge from bankruptcy is absolute, as confirmed in the recent case of Paul Allen (as Trustee in Bankruptcy) v Pramod Mittal (in bankruptcy) [2022] EWHC 762 (Ch).
Background
On 19 June 2020, Mr Mittal was declared bankrupt and was due to be automatically discharged from bankruptcy on 18 June 2021, pursuant to section 279(1) of the Insolvency Act 1986 (the Act). On 10 June 2021, the Trustee issued an application to suspend Mr Mittal’s discharge from bankruptcy, just eight days preceding the date of discharge (the Application).
On 17 June 2021, the Application came before the court on an urgent basis and the court granted an interim suspension of discharge, listing the final hearing of the Application on 10 November 2021. Prior to the hearing, the Trustee issued a further application for retrospective validation of service of the Application without providing a practical reason for the delay of this application.
Issues with service
The Trustee’s legal representatives, Mishcon de Reya LLP (Mischon) sent an email to Mr Mittal’s legal representative, Collyer Bristow LLP (“Collyer”) on 11 June 2021, attaching a copy of the Application. In the same email, it was stated that a hard copy will be sent by courtier on the same day.
The courier failed to deliver the documents and Collyer subsequently agreed to accept service by email. However, Mishcon did not subsequently send an email to effect service of the Application, relying instead on the earlier email which provided a copy of the documents. Mr Mittal subsequently argued that the Application had not been properly served.
High Court's decision
At the final hearing, the court accepted that there was a compelling argument for the suspension of Mr Mittal’s discharge from bankruptcy based on his conduct. However, the issue of service of the Application was a matter which required determination at the hearing.
The High Court considered whether there was valid service of the Application by electronic means (i.e. by the email sent on 11 June 2021). Under Practice Direction 6A of the Civil Procedure Rules (CPR), the party accepting service must previously have indicated in writing to the party serving their willingness to accept service, and in this case the agreement to accept service by electronic means was only provided after the documents were sent by email. It was therefore held that Mishcon’s attempt to serve by email failed to comply with the service provisions set out in the CPR, and consequently the Application was not properly served before Mr Mittal’s discharge from bankruptcy.
Consequently, while the judge considered that there was merit to the Application, due to the failure to effectively serve the Application before Mr Mittal’s discharge from bankruptcy, the Application was dismissed as a result of the limitation provision set out in section 279 of the Act.
Comment
David Steinberg, restructuring and insolvency partner at Stevens & Bolton, commented: ‘Limitation has long been, and continues to be, a challenge in court proceedings, usually resulting in rushed applications issued to ‘stop the clock’. This case acts as a helpful reminder to insolvency practitioners and to their legal advisers that close attention must be paid to procedural requirements, such as service, when the expiry of a limitation period is approaching. When the stakes are so high, nothing short of rigorous adherence to the letter of the rules will suffice. It is not the first time the courts have dismissed such applications on procedural grounds’.